Anthem predicts better 2019 than Wall Street forecast, shares rise

(Reuters) - Anthem Inc (ANTM.N) on Wednesday said its own expectations for 2019 earnings are ahead of current Wall Street estimates and the health insurer also raised its 2018 profit forecast, and its shares rose as much as 5 percent.

The office building of health insurer Anthem in seen in Los Angeles, California February 5, 2015. REUTERS/Gus Ruelas

The company also reported higher-than-expected third quarter profit as it reined in costs.

“We’re entering 2019 in a position of strength,” Chief Executive Officer Gail Boudreaux said on a conference call with analysts. Current 2019 consensus estimates for core earnings are “slightly below” Anthem’s long-term high-single to low-double digit growth target, she added.

Wall Street is forecasting adjusted earnings of $17.13 per share for 2019, according to Refinitiv data.

“I think people are reacting to the comments on next year’s outlook,” Credit Suisse analyst A.J. Rice said of the share price bump. “I still think there’s some level of conservatism baked in. They tend to be conservative.”

Anthem has decided to take its pharmacy benefits business in-house in 2020, when it will start managing billions of dollars of patient prescriptions under its IngenioRx brand in a bid to cut costs.

The company expects to save $4 billion a year as a result and said it will return about 20 percent to shareholders.

Membership in Anthem’s health plans fell by 753,000 from 40.3 million a year ago as it continues to exit its Obamacare business and lost out on members buying its Medicaid health plans for low-income customers.